The Federal Government's commitment to encouraging and assisting state re-balancing efforts can be traced back at least as far as the enactment of the Medicaid 1915(c) HCBS legislative authority in 1981. Nevertheless, "re-balancing" toward HCBS took place only gradually over the following two decades. Considerably more progress was made "de-institutionalizing" and "diverting" from institutional placement children and adults with developmental disabilities as compared to the aged/disabled, especially the elderly in need of considerable hands on human assistance with personal care tasks and/or severe dementia. In 1992, HCBS accounted for only 15 percent of all Medicaid spending on LTC services (Kaiser Commission on Medicaid and the Uninsured 2004). In 1994, the Clinton Administration adopted policy changes that made it easier for states to obtain federal approval to expand the numbers of Medicaid beneficiaries served under 1915(c) HCBS waivers without having to show that they had or planned to reduce institutional bed supply by corresponding numbers (a requirement referred to as the "cold bed rule" that was particularly difficult to meet with respect to nursing home beds since these facilities, unlike ICFs/IID whose residents had intellectual or developmental disabilities (ID/DD), were not predominantly state facilities serving Medicaid beneficiaries exclusively). From 1995 through 2009, the percentage of total Medicaid spending on LTC going toward HCBS has increased by 1-3 percent annually (Thomson Reuters, 2011).

In 1999, the Supreme Court issued its landmark ruling in the Olmstead v L.C. case that the Americans with Disabilities Act required states generally (the plaintiff State of Georgia in particular) to make all reasonable efforts to meet the LTC needs of citizens receiving or at risk of requiring publicly-funded institutional care in the community instead (Ng, Wong, and Harrington 2011). President Bush launched a cross-departmental "New Freedom" Initiative to ensure federal programmatic and regulatory compliance with the ruling, and Congress funded a Real Choice/Systems Change grant program to help states develop the infrastructure to comply with the spirit as well as the letter of the Olmstead decision. Between FY 2001 and FY 2010, the Centers for Medicare and Medicaid Services (CMS) awarded almost $289 million in Real Choice/Systems Change grants to help states develop the infrastructure to expand Medicaid beneficiaries' access to HCBS alternatives to institutional LTC (ILTC) (http://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Long...).

In this report, the use of the word "states" encompasses the 50 states and the District of Columbia.

This study's predecessor summarized the strengths and limitations of MAX data for studying LTC (Wenzlow et al. 2008), finding that although the MAX 2002 data were still incomplete for some states, and service-specific information on HCBS was not yet reliable, MAX can be a useful tool in gaining a better understanding of which populations are receiving HCBS.

Some Medicaid enrollees (an unknown number) have disabilities but are not identified as eligible on the basis of disability. We expect this number to be small. However, to the degree that such individuals exist in our study states and differ from persons in our sample, the results presented here will be biased.

The PS files do not contain information on the timing or length of institutional stays. MAX claims, which were not available for this study, are needed for such analyses.

We used 2007 rather than 2006 ACS because aged enrollees may be underestimated in earlier rounds of the survey's data.

For people dually eligible for Medicare and Medicaid, Medicare covers inpatient and other acute services. Because institutionalized enrollees are more likely to be dually eligible for Medicare and Medicaid (Wenzlow et al. 2008), spending on people using HCBS as a percentage of total Medicaid spending for LTC users should be interpreted with caution.

Note that in any given year, an individual can receive both HCBS and institutional care.

In the 34 states included in both the present study and Wenzlow et al. (2008), HCBS as a percentage of LTC expenditures increased from about 34-40 percent and use of service increased from 59 percent to 64 percent between 2002 and 2006. The share of expenditures increased in all states except Idaho, but the rate of use decreased in a handful of states.

Breakdowns for those under 65 by age were not included in Wenzlow et al. (2008).

Unique Medicaid programs and services also are available for people with mental illness. However, many people with mental illness use health care services for short durations rather than for LTC, and we were unable to identify long-term mental health care in MAX uniquely. In this study, we thus group people with mental illness by age with enrollees who are aged or have physical disabilities.

We identified but did not separately report on the approximately 20,000 individuals over 65 using either ID/DD waiver or ICFS/IID services in the 37 states.

The ACS disability questions are relatively primitive measures of LTC disability, especially when compared with the detailed assessments that are typically performed to satisfy the medical criteria for Medicaid LTC services. Nevertheless, they provide a consistent measure across states, and are a useful gauge of the extent to which Medicaid programs serve broadly-defined groups of low-income people with disabilities

Section 1915(c) services are identified by program type codes 6 and 7 in MAX. Section 1915(c) (program type 7) of the Social Security Act applies to Medicaid enrollees who otherwise would require Medicaid-covered hospital, nursing facility, or ICF/IID care. Section 1915(d) (program type 6) applies specifically to individuals over age 65 requiring such a level of care. Most states do not differentiate between the two program types in MSIS and report all waiver services under one or the other program code. As suggested in MAX documentation, we sum expenditures reported under the two program codes for our analysis.

Expenditures for any institutional or community-based LTC services provided under managed care are subsumed into managed care premiums. Services covered under managed care (including any for LTC) generally cannot be identified in MAX as they are reported in "encounter records," which are known to be incomplete in MSIS and MAX.

In this report, the use of the word "states" encompasses the 50 states and the District of Columbia.

We excluded people reported to be eligible only for family planning services, unqualified aliens eligible only for emergency services, and restricted-benefit duals receiving coverage only for Medicare premiums and cost sharing.

We used 2007 rather than 2006 ACS data for the study because estimates of aged enrollees were unreliable in earlier years of the survey.

The ACS also has information about conditions that substantially limit a person's ability to walk, climb stairs, reach, lift, or carry and whether a physical mental, or emotional condition lasting six months or more makes it difficult for a person to go outside alone to shop or visit a doctor's office. However, most states measure functional eligibility based on difficulties with ADLs. Therefore we used only the ADL measure in our definition of functional eligibility.

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